Certified Government Financial Manager (CGFM) Practice Exam 2025 - Free CGFM Practice Questions and Study Guide

The component of internal control that emphasizes the significance of having competent individuals aligned with organizational objectives is the control environment. The control environment sets the tone for the entire organization and is a critical element that reflects the integrity, ethical values, and competence of the entity's people. It encompasses the attitudes and actions of management and the board of directors regarding the importance of internal control.

This component underscores the necessity of hiring and retaining individuals who possess the requisite skills and qualifications to achieve the organization's objectives. A strong control environment promotes a culture of accountability and a commitment to compliance with laws and regulations, which is essential for effective internal control systems.

By fostering a workforce that is not only competent but also aligned with the organization's goals, the control environment enhances the effectiveness of the other components of internal control, ultimately supporting risk management and the achievement of objectives.